BILL NUMBER: SB 1656	CHAPTERED  07/05/00

	CHAPTER   84
	FILED WITH SECRETARY OF STATE   JULY 5, 2000
	APPROVED BY GOVERNOR   JULY 5, 2000
	PASSED THE SENATE   JUNE 15, 2000
	PASSED THE ASSEMBLY   JUNE 15, 2000
	AMENDED IN ASSEMBLY   JUNE 15, 2000
	AMENDED IN ASSEMBLY   JUNE 14, 2000

INTRODUCED BY   Senator Alarcon
   (Coauthors:  Senators Bowen, Figueroa, Hughes, Perata, Sher, and
Vasconcellos)
   (Coauthors:  Assembly Members Alquist, Aroner, Cedillo, Corbett,
Correa, Ducheny, Dutra, Hertzberg, Honda, Jackson, Lempert,
Longville, Lowenthal, Mazzoni, Reyes, Romero, Shelley, Steinberg,
Thomson, Torlakson, Villaraigosa, Washington, Wiggins, and Wildman)

                        FEBRUARY 22, 2000

   An act to amend Sections 50840, 50841, and 50842 of, and to add
Chapter 6 (commencing with Section 50650) to, and to repeal Chapter
3.6 (commencing with Section 50533) of, Part 2 of Division 31 of, the
Health and Safety Code, relating to housing, making an appropriation
therefor.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1656, Alarcon.  Housing.
   (1) Existing law contains various programs relating to housing
assistance, including the Senior Citizens' Shared Housing Program,
the California Self-Help Housing Program, and specified federal
programs.
   This bill would establish the CalHome Program, to be administered
by the Department of Housing and Community Development, to provide
funds to local public agencies or nonprofit corporations as either
grants for programs that assist individual households or loans that
assist multiunit development projects.  This bill would also repeal
the Senior Citizens' Shared Housing Program and state the intent that
the CalHome Program take the place of the Senior Citizens' Shared
Housing Program.
   (2) Existing law creates the California Housing Trust Fund for
deposit of certain bond proceeds and other revenues, and provides
that the money in the fund is to be used for housing programs, as
specified.  Not less than 20% of the revenue deposited annually in
the fund is required to be expended in rural areas, as defined.
   This bill would continuously appropriate money in the fund for
investment in securities that are eligible for investment of surplus
state moneys, as specified.  It would provide that all interest or
other increment resulting from investment may only be expended, upon
appropriation, for housing programs that serve lower or very low
income households, and not less than 20% of any interest or other
increment appropriated in any fiscal year shall be expended in rural
areas.  It would revise the definition of rural areas for this
purpose.
   Appropriation:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Chapter 3.6 (commencing with Section 50533) of Part 2
of Division 31 of the Health and Safety Code is repealed.
  SEC. 2.  Chapter 6 (commencing with Section 50650) is added to Part
2 of Division 31 of the Health and Safety Code, to read:

      CHAPTER 6.  CALHOME PROGRAM

   50650.  The Legislature finds and declares as follows:
   (a) An adequate supply of safe and affordable housing is the
foundation for strong and sustainable communities.  Owner occupied
housing is a key housing resource, contributing to neighborhood
stability as well as economic vitality.
   (b) In California, homeownership is beyond the reach of a large
segment of the population.  There are also many homeowners who lack
the resources to make necessary repairs to their homes, or who would
welcome the opportunity to share them with suitable tenants.
   (c) Reflecting California's diversity, there is a variety of
proven approaches to the promotion of homeownership within the state.
  The purpose of the CalHome Program established by this chapter is
to support existing homeownership programs aimed at lower and very
low income households and operated by private nonprofit and local
government agencies, and thereby to increase homeownership, encourage
neighborhood revitalization and sustainable development, and
maximize use of existing homes.
   (d) The CalHome Program is intended to take the place of the
Senior Citizens' Shared Housing Program established by Chapter 3.6
(commencing with Section 50533), which is repealed by the act
enacting this chapter.
   50650.1.  This chapter shall be known and may be cited as the
CalHome Program.
   50650.2.  The department shall administer this chapter.
   50650.3.  (a) Funds appropriated for purposes of this chapter
shall be used to enable low- and very low income households to become
or remain homeowners.  Funds shall be provided by the department to
local public agencies or nonprofit corporations as either of the
following:
   (1) Grants for programs that assist individual households.
   (2) Loans that assist development projects involving multiple
homeownership units, including single-family subdivisions.
   (b) Grant funds may be used for first-time homebuyer downpayment
assistance, home rehabilitation, homebuyer counseling, home
acquisition and rehabilitation, or self-help mortgage assistance
programs, or for technical assistance for self-help and shared
housing homeownership.  Loan funds may be used for purchase of real
property, site development, predevelopment, and construction period
expenses incurred on homeownership development projects, and
permanent financing for mutual housing or cooperative developments.
Upon completion of construction, the department may convert project
loans into grants for programs of assistance to individual
homeowners.  Financial assistance provided to individual households
shall be in the form of deferred payment loans, repayable upon sale
or transfer of the homes, when they cease to be owner-occupied, or
upon the loan maturity date.  All loan repayments shall be used for
activities allowed under this section, and shall be governed by a
reuse plan approved by the department.  Those reuse plans may provide
for loan servicing by the grant recipient or a third-party local
government agency or nonprofit corporation.
   50650.4.  To be eligible to receive a grant or loan, local public
agencies or nonprofit corporations shall demonstrate sufficient
organizational stability and capacity to carry out the activity for
which they are requesting funds, including, where applicable, the
capacity to manage a portfolio of individual loans over an extended
time period.  Capacity may be demonstrated by substantial successful
experience performing similar activities, or through other means
acceptable to the department.  In allocating funds, the department
shall utilize a competitive application process, using weighted
evaluation criteria, including, but not limited to, (a) the extent
that the program or project utilizes volunteer or self-help labor,
trains youth in construction skills, or involves community
participation, and (b) whether the program or project contributes
toward community revitalization.  To the extent feasible, the
application process shall ensure a reasonable geographic distribution
of funds.
   50650.5.  For the purposes of this chapter, mutual housing and
cooperative housing shall be deemed to be forms of homeownership.
For these project types:  (a) program funds shall be used for project
development costs only; (b) the department shall enter into a
regulatory agreement limiting occupant incomes, occupancy charges,
and share purchase terms for 55 years; and (c) notwithstanding
Section 50650.3, program assistance shall be provided in the form of
a deferred payment loan.
   50650.6.  The department may use up to 5 percent of the funds
appropriated for the purposes of this chapter for its costs in
administering the program.
   50650.7.  For appropriations of fifteen million dollars
($15,000,000) or less, the department may administer the funds using
guidelines that shall not be subject to the Administrative Procedure
Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Title 2
of the Government Code).  If an appropriation exceeds that amount,
the department may administer the funds using guidelines for 24
months, during which time those guidelines shall not be subject to
the Administrative Procedure Act.  The guidelines and any regulations
governing the CalHome Program shall include, among other things,
loan terms and limits, underwriting standards, home price limits,
application procedures and selection criteria, loan and grant
documentation requirements, and monitoring requirements.
  SEC. 3.  Section 50840 of the Health and Safety Code is amended to
read:
   50840.  (a) The Legislature hereby finds and declares all of the
following:
   (1) California is experiencing a severe housing shortage that
compounds itself further each year.  While it is estimated that
250,000 new homes are needed each year to keep up with demand, only
140,000 building permits for new residential housing were issued in
1999.  Moreover, the average number of residential building permits
issued over the last seven years is only 105,000 new units per year.

   (2) The shortage in housing supply has led to skyrocketing home
sale and rental prices, which have made housing unaffordable to many
Californians.  Seven of the nation's 10 least affordable metropolitan
areas for housing are in California.  More than 35 percent of renter
households experience an extreme housing cost burden, which has been
defined as paying more than 50 percent of their income for housing.

   (3) Long-term strategies are needed to address this ongoing
deficit in new home production and to meet the state's housing needs.

   (4) In addition to helping meet the immediate need for housing,
the state will always have a role to play in assisting in the
provision of housing for families unable to afford market-rate rents.

   (5) A permanent source of financing is needed to fulfill this
ongoing need for state housing assistance.
   (6) A housing trust fund would provide a permanent source of
financing to be used solely to fund housing programs that serve low-
and very low income households.
   (b) (1) It is the intent of the Legislature that the principal in
the California Housing Trust Fund shall not be spent, but rather
invested as an endowment, and that the return on this investment be
used to fund programs that meet the housing needs of lower and very
low income households.
   (2) It is the intent of the Legislature to make a significant
appropriation to the California Housing Trust Fund in the 2001-02
fiscal year to ensure that there are sufficient ongoing resources to
provide for the housing needs of lower income households.
  SEC. 4.  Section 50841 of the Health and Safety Code is amended to
read:
   50841.  (a) There is hereby created in the State Treasury the
California Housing Trust Fund.  Notwithstanding Section 13340 of the
Government Code, all money in the fund is continuously appropriated
for the purposes of investment in a manner calculated to deliver the
greatest rate of return consistent with the requirements of Section
16430 of the Government Code.
   (b) All interest or other increment resulting from investment or
deposit of moneys in the fund shall be deposited in the fund,
notwithstanding Section 16305.7 of the Government Code.  Except as
provided in Section 50842, no money in the fund shall be spent,
loaned, transferred, or otherwise removed from the fund.
  SEC. 5.  Section 50842 of the Health and Safety Code is amended to
read:
   50842.  (a) All interest or other increment resulting from any
investment of money in the California Housing Trust Fund may only be
expended, upon appropriation by the Legislature, after allocation to
the Treasurer of an amount not to exceed one-half of 1 percent of any
interest and other increment to cover the actual cost of
administering those investments, for housing programs or those
portions of housing programs authorized by law that serve lower and
very low income households, as defined in Sections 50079.5 and 50105,
respectively.
   (b) Not less than 20 percent of any interest or other increment
appropriated by the Legislature in any fiscal year from the
California Housing Trust Fund shall be expended in rural areas, as
defined by Section 50199.21.
   (c) Any interest or other increment not appropriated by the
Legislature for the purpose described in subdivision (a) in the
fiscal year succeeding its accrual shall be deposited in the
California Housing Trust Fund and shall no longer be deemed interest
or other increment for the purposes of this section.
